Blog founder seeks success writ large

PUBLISHED : Tuesday, 12 July, 2005, 12:00am
UPDATED : Tuesday, 12 July, 2005, 12:00am

One mainland entrepreneur is determined to do business on a grand scale, with expansion, power and profit as his goals

Fang Xingdong has come a long way from his days of scratching out a living writing articles criticising Microsoft.

The founder and chief executive of China's top weblog site is targeting a Nasdaq listing by the end of next year and hopes the double billing of China and blogging can help his company achieve a market capitalisation of more than US$1 billion.

Last week, the English name of the site changed from BlogChina to Bokee in preparation for the company's second round of venture capital funding.

Six firms will add US$10 million to the US$500,000 of seed capital invested a year ago by Softbank, taking the total venture capital ownership to 30 per cent. If Mr Fang can deliver an initial public offering, then those firms stand to gain enormously on their investment.

The problem is that blog service providers have yet to break even in China or make any significant money elsewhere.

Of the 100 million mainland internet users, 5 million are bloggers and about 2 million have blog accounts with Bokee.

As with the internet, the pioneers of the blogosphere tend to be purists who see the concept as a way to democratise cyberspace by allowing everyone to become their own publisher. Mr Fang used to be regarded as one of those purists.

Born in the small Zhejiang province city of Yiwu, he graduated from the Xi'an University of Communications in 1994 before moving to Beijing where he began writing articles and columns on the IT industry. He discussed writing a regular technology column for the South China Morning Post in 1999 but his lack of English proved too big an obstacle, and he founded an IT consultancy instead.

That was also the year Challenge Microsoft Hegemony hit the shelves, one of 18 books he has had published. Three years later he first heard the word 'blog', created the Chinese word for blog - boke - and established one of China's first blogs as an outlet for his Microsoft-directed vitriol.

'I set up my own site because the articles I was posting on Sina and Sohu kept getting removed. I realised blogging was the new revolution in IT,' Mr Fang said.

But blogging's cash-generating potential was not so obvious. It was not until June last year that Mr Fang and his business partner, Wang Junxiu, hired their first employee with the seed capital from Softbank.

In just over a year, the company has expanded to a staff of 210 and is hiring about 50 people a month. Mr Fang is optimistic Bokee can break even by the end of the year, and predicts the site's registered bloggers will increase from 2 million to 10 million in the same period.

The site boasts big name advertisers such as IBM, Hewlett-Packard and Dell, but the plan to push the business of blogging into profitability goes beyond the traditional reliance on advertising.

Bokee has also partnered with Nokia, Samsung, Motorola and telecoms giant China Mobile to provide wireless blogging services for a fee. But the revenue generator Mr Fang hopes will make his listing dream a reality is based on the model of Korean blog site Cyworld. A virtual currency pilot program beginning this month will allow Bokee bloggers to charge their readers, with the site taking a 20 per cent fee.

'Bloggers can charge as much or as little as they want for their writing and will be able to use what they earn to purchase real and virtual goods and services,' Mr Fang said.

The virtual goods will furnish the virtual homes and enrich the virtual life of each blogger's online representation.

But venture capitalist Lawrence Tse of Gobi Partners has his doubts. 'The people who will make the most money from their blogs are going to be serious writers, not the sort of people who buy virtual furniture. Would [billionaire American businessman blogger] Mark Cuban buy virtual goods?' he said.

He also questioned whether mainland internet users were prepared to pay to read blogs.

'In China there are too many blogs and a shortage of must-read ones. If a blogger starts to charge, then readers will probably move on to one that doesn't,' he said.

Mr Fang is aware of the importance of star power, and has hired the few must-read bloggers who do exist in China. In mid-2003, online Guangzhou sex diarist Mu Zimei dragged blogging into the national spotlight with her lurid accounts of her most intimate experiences. With her writing banned in China, today she is Bokee's marketing strategy manager.

The winner of last year's inaugural Deutsche Welle International Weblog Awards was the Chinese blogger 'Aggressive Little Snake' (real name Yan Wenbo), whose The Dog Newspaper site scooped the prize for its witty critique of the rights of dogs in a country where it is impossible to discuss human rights. Mr Yan was hired by Bokee to edit its online magazine.

One area of concern for investors in China's blogging industry is the uncertainty surrounding government regulations. Despite media reports to the contrary, bloggers on Bokee and other sites do not have to individually register their true identities with the government.

Rather than hurt it, the new regulations have probably helped Bokee by forcing independent bloggers on to mainstream blog portals.

But the company has 10 employees working around the clock removing 'sensitive' content, including anything remotely critical of the government.

Mr Fang said: 'The internet is not a political tool but rather a way for ordinary Chinese to access and share information and knowledge.'

This pragmatic attitude has turned some in the blogosphere against Mr Fang.

'He used to criticise Microsoft and write about principles and values, but now his primary concern is doing business,' said popular technology blogger Hong Bo.

Many bloggers like Mr Hong resent the Bokee model of expansion, power and profit and think the site should stick with being a blog service provider and not try to emulate the giant Web portals.

Andrew Lih, director of technology, Journalism and Media Studies Centre, The University of Hong Kong, said: 'From a business model perspective, China is still in the Yahoo! phase, wanting to be a one-stop shop for everything and everyone, whereas the United States and other markets have moved on.'

But for the moment Bokee is capitalising on its success. And if it can continue, Mr Fang may just have a shot at creating the next Nasdaq internet powerhouse.